How should operators battle with OTT?

Operators are undergoing disruptive changes. “The substitution role of Internet services is becoming increasingly prominent, not only forming a substitution effect on value-added services such as SMS and MMS, but also diverting a large number of voice services. The value of the industry is gradually shifting from pipes to content, from communication networks to the Internet, and from voice services to information services. For operators, competition with Internet companies will be more intense than that in traditional communications.

OTT is originated from basketball and other sports, meaning “over-the-top pass”, which graphically describes the situation of operators being reduced to mere “transmission pipes” in the face of the business developed by Internet companies through communication networks, unable to reach the huge value transmitted in the pipes.

Over-the-top (OTT) players, represented by Apple, Google and Tencent, have not only bypassed telecom operators and gone directly to consumers, but new communication tools such as WeChat and Whatsapp are also nibbling at voice, SMS and other telecom services. A tug-of-war between operators and OTT players is heating up day by day.

The decline in voice revenues for global telecom operators has become indisputable due to the encroachment of Internet OTT players on the voice business; and the data business, on which there were high hopes, is facing an increasingly serious problem of scissors between incremental growth and non-revenue. Operators urgently need to transform in order to seek sustainable growth. We have seen that leading operators have already taken strategic action. China Mobile strategically abandoned its SMS business in 2014, while restructuring its video base to create a new media company called “MIGU”; Vodafone Group has invested heavily in video acquisitions, acquiring Germany’s largest TV company KDG and Spain’s ONO, targeting full-service capabilities and access to video content; Telefónica Group The Telefónica Group has announced its transformation into a media company.

To achieve commercial success in the video business, telecom operators need to gain deep insight into the video user experience,  develop cooperation and join hands with industry partners to build a boutique network with the best video experience in order to truly achieve growth in subscribers and revenue. A deep understanding of the best user experience to meet the growing demand for the ultimate video experience The consumer experience in the video business consists of two main components, on the one hand, the traditional video sensory experience requirements, better video experience is the basis for consumer acquisition; 4K will be a revolution in the TV field sensory experience, bringing consumers “True to life 4K will be a revolution in the sensory experience of TV, bringing consumers a visual feast of “True to life” and “Better than life”.

On the other hand, the user experience, especially in the mobile video sector, is the need to remove the traffic/bandwidth consumption barrier for users. Designing a reasonable business model for the development of video services and building future-oriented business evolution and sustainability Based on the operator’s own capabilities and business development stage, different business models can be adopted for the development of video. The first is traffic/pipeline operation, in which operators focus on the provision of pipeline capacity, content acquisition and business operation, and adopt a model of cooperation with OTTs to ensure user experience and stimulate traffic/bandwidth development through network transformation to realise traffic realisation and bandwidth filling; the second is own video business development, as a comprehensive leading operator, to build its own boutique video business, control user development and business entrance, in order to truly maximize the value of the video business.

The third is the opening of video capabilities. Operators can open up video business capabilities and pipeline capabilities to promote the prosperity and development of all walks of life, such as video dispatching in the field of public safety, the field of insurance “video out of insurance”, operators through the building of the video arena, in the pipeline and business level can get the value of cash.